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Revenue from Contracts with Customers
 9 Months Ended
Oct. 03, 2021
Revenue from Contract with Customer [Abstract]  
Revenue from Contracts with Customers REVENUE FROM CONTRACTS WITH CUSTOMERS
Disaggregation of Revenue

The following tables represent disaggregated revenue from contracts with customers for the three and nine months ended October 3, 2021 and September 27, 2020 along with the reportable segment for each category:

Three Months Ended
(In thousands)October 3, 2021September 27, 2020
CategoryResidential, Light CommercialCommercial and Industrial SolutionsOthersTotalResidential, Light CommercialCommercial and Industrial SolutionsOthersTotal
Solar power systems sales and EPC services$276,606 $36,956 $980 $314,542 $191,016 $73,840 $2,688 $267,544 
Operations and maintenance— 3,368 697 4,065 — — 75 75 
Residential leasing1,291 — — 1,291 1,284 — — 1,284 
Solar services3,738 — — 3,738 5,485 418 — 5,903 
Total revenues$281,635 $40,324 $1,677 $323,636 $197,785 $74,258 $2,763 $274,806 

Nine Months Ended
(In thousands)October 3, 2021September 27, 2020
CategoryResidential, Light CommercialCommercial and Industrial SolutionsOthersTotalResidential, Light CommercialCommercial and Industrial SolutionsOthersTotal
Solar power systems sales and EPC services$757,983 $145,986 $7,945 $911,914 $568,303 $170,403 $3,147 $741,853 
Operations and maintenance— 8,776 2,562 11,338 — 3,619 19,844 23,463 
Residential leasing3,765 — — 3,765 3,937 — — 3,937 
Solar services11,944 — — 11,944 12,524 1,242 — 13,766 
Total revenues$773,692 $154,762 $10,507 $938,961 $584,764 $175,264 $22,991 $783,019 

We recognize revenue for sales of modules and components at the point that control transfers to the customer, which typically occurs upon shipment or delivery to the customer, depending on the terms of the contract, and we recognize revenue for operations and maintenance and solar services over the term of the service period.

For EPC revenue and solar power systems sales, we commence recognizing revenue when control of the underlying system transfers to the customer and continue recognizing revenue over time as work is performed based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligations. For contracts in which we sell membership interests in certain project companies, we recognize revenue for the initial development and other solar assets at the point that control transfers to the customer, and we recognize continuing EPC revenue for work provided to the joint venture over time as work is performed.

Our arrangements may contain clauses such as liquidated damages for delays or early performance bonuses, most favorable pricing, or other provisions that can either increase or decrease the transaction price. These variable amounts generally are awarded upon achievement of certain performance metrics or milestones. Variable consideration is estimated at each measurement date at its most likely amount to the extent that it is probable that a significant reversal of cumulative revenue recognized will not occur and true-ups are applied prospectively as such estimates change.
Judgment is required to evaluate assumptions including the amount of net contract revenues and the total estimated costs to determine our progress towards contract completion and to calculate the corresponding amount of revenue to recognize. If estimated total costs on any contract are greater than the net contract revenues, we recognize the entire estimated loss in the period the loss becomes known. For contracts with post-installation systems monitoring and maintenance, we recognize revenue related to systems monitoring and maintenance over the non-cancellable contract term on a straight-line basis.

Changes in estimates for sales of systems for EPC services occur for a variety of reasons, including but not limited to (i) construction plan accelerations or delays, (ii) product cost forecast changes, (iii) change orders, or (iv) changes in other information used to estimate costs. Changes in estimates may have a material effect in our consolidated statements of operations. The table below outlines the impact on revenue of net changes in estimated transaction prices and input costs for systems related sales contracts (both increases and decreases) for the three and nine months ended October 3, 2021 and September 27, 2020 as well as the number of projects that comprise such changes. For purposes of the following table, only projects with changes in estimates that have an impact on revenues and or costs of at least $1.0 million, calculated on a quarterly basis during the periods, were presented. Also included in the table is the net change in estimate as a percentage of the aggregate revenue for such projects.

Three Months EndedNine Months Ended
(In thousands, except number of projects)October 3, 2021September 27, 2020October 3, 2021September 27, 2020
Increase in revenue from net changes in transaction prices$— $1,142 $2,131 $834 
Decrease in revenue from net changes in input cost estimates— (1,041)(2,084)(1,092)
Net increase (decrease) in revenue from net changes in estimates$— $101 $47 $(258)
 
Number of projects—234
Net change in estimate as a percentage of aggregate revenue for associated projects— %0.3 %0.6 %(0.2)%


Contract Assets and Liabilities

Contract assets consist of (i) retainage which represents the earned, but unbilled, portion of a construction and development project for which payment is deferred by the customer until certain contractual milestones are met; and (ii) unbilled receivables which represent revenue that has been recognized in advance of billing the customer, which is common for long-term construction contracts. Contract liabilities consist of deferred revenue and customer advances, which represent consideration received from a customer prior to transferring control of goods or services to the customer under the terms of a sales contract. Refer to Note 4. Balance Sheet Components for further details. Total contract assets and contract liabilities balances as of the respective dates are as follows:
As of
(In thousands)October 3, 2021January 3, 2021
Contract assets$94,115 $122,802 
Contract liabilities98,756 102,594 
During the three months ended October 3, 2021, the decrease in contract assets of $4.2 million was primarily driven by billings for commercial projects where certain milestones had been reached. During the nine months ended October 3, 2021, decrease of $28.7 million was primarily driven by a settlement for milestone achievement for one legacy power plant project, as well as a collection of variable consideration on a power plant development project sold in prior years.

During the three and nine months ended September 27, 2020, the increase in contract assets of $5.7 million and $4.5 million, respectively, was primarily driven by billings for commercial projects where certain milestones had not yet been reached, but criteria for revenue recognition has been met.

During the three months ended October 3, 2021, the increase in contract liabilities of $5.0 million was primarily due to an increased volume of invoiced contracts waiting for revenue recognition. During the nine months ended October 3, 2021, decrease of $3.8 million was due to the attainment of milestones billings for various projects.

During the three and nine months ended September 27, 2020, the decrease in contract liabilities of $2.0 million and $6.7 million, respectively, was primarily due to the utilization of customer advances.

During the three and nine months ended October 3, 2021, we recognized revenue of $32.0 million and $43.7 million, respectively, that was included in contract liabilities as of July 4, 2021 and January 3, 2021, respectively. During the three and nine months ended September 27, 2020, we recognized revenue of $26.9 million and $78.4 million, respectively, that was included in contract liabilities as of June 28, 2020 and December 29, 2019, respectively.

The following table represents the average percentage of completion as of October 3, 2021 for EPC agreements for projects that we are constructing. We expect to recognize $152.0 million of revenue upon transfer of control of the projects.

ProjectRevenue CategoryEPC Contract/Partner Developed ProjectExpected Year Revenue Recognition Will Be CompletedAverage Percentage of Revenue Recognized
Various Distribution Generation ProjectsSolar power systems sales and EPC servicesVarious202392.2 %

As of October 3, 2021, we have entered into contracts with customers for sales of modules and components for an aggregate transaction price of $357.3 million, the substantial majority of which we expect to recognize over the next 12 months.